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Chinese EV Price War Threatens Malaysia’s Auto Industry
Rising trade tensions between the United States and China are reshaping global automotive flows — and Southeast Asia is emerging as the next battleground. As new US tariffs weigh on China’s electric vehicle (EV) exports, Chinese manufacturers are increasingly redirecting excess capacity into ASEAN markets, intensifying price competition across the region.
Malaysia is now feeling the pressure.
Chinese EV makers, including BYD and Nio, have begun aggressively targeting Southeast Asia with competitively priced models. In Malaysia, entry-level EVs priced below RM100,000 are already being tested. This pricing strategy places substantial strain on domestic manufacturers and established Japanese mid-tier brands operating in the country.
According to Damien Duhamel, managing partner and automotive expert at Eurogroup Consulting, Southeast Asia is becoming a strategic outlet for China’s EV overcapacity. With China’s domestic EV capacity utilisation reportedly below optimal levels for several OEMs, exporting into ASEAN markets provides both scale and pricing leverage.
Malaysia’s auto industry, historically supported by national brands such as Proton, now faces structural challenges. While domestic demand for EVs is growing, local manufacturers lack the production scale and cost advantages enjoyed by Chinese competitors. Aggressive pricing could threaten profitability and put pressure on local supply chains.
A similar pattern has emerged in Thailand, Southeast Asia’s largest automotive hub. Authorities there have launched investigations following complaints about aggressive discounting by Chinese brands, raising concerns about resale values and financial exposure for early adopters.
Market data shows that Chinese brands have significantly expanded their footprint across ASEAN over the past two years. The rapid rise in market share reflects not only price competitiveness but also improvements in quality and product offering.
However, the strategic implications go beyond pricing. The redirection of Chinese EV exports into Southeast Asia may accelerate regional consolidation, reshape brand hierarchies, and force domestic players to rethink positioning.
As global trade tensions persist, ASEAN markets are likely to remain central to China’s automotive expansion strategy. For Malaysia, the challenge will be balancing consumer affordability with long-term industrial sustainability.